Gemma Davison and Lucy Bronze were on target for the hosts, who made it five wins in six games and kept alive their chances of claiming back-to-back league titles.
Liverpool took the lead after just six minutes when Davison was bundled over by Laura Bassett, having turned in the Chelsea area, and got up to convert the penalty, her fifth goal of the season.
Bronze (24) then added a superb second, picking up possession 35 yards out before jinking her way through the Chelsea defence and shooting home off the underside of the crossbar.
It was almost 3-0 just before half-time when Corina Schroder put Natasha Dowie in on goal but Marie Hourihan pulled off a good save.
Chelsea brought on Rosella Ayane at the interval, leading to a more balanced second half, but they were unable to get back into the match.
And Hourihan had to make another good stop three minutes from time, denying Davison a second after she had skipped through.
Liverpool manager Matt Beard said: “We knew tonight that, if we didn’t win, we were probably out of the Europe race and out of the title chase.
“If you focus well and train well you’re going to go into the game with the right mentality and, to be fair to the players, they’ve responded to that and tonight’s performance was fantastic.
“We’re not going to give it up. We worked incredibly hard last year to win that title, and that showed in the players’ performance tonight.”
Chelsea boss Emma Hayes said: “We’re not title contenders.
“I’ve said that all along and, on today’s evidence, it proves that we’re nowhere near in with a shout this year.
“Liverpool have confirmed why they are champions and why they are contending with Birmingham.
“As long as we finish in the top four I’m happy, and it will be interesting to watch Liverpool go neck-to-neck with Birmingham in the run-in.”